Saving graces

There’s been a flurry of CPO appointments announced in the past month. Businesses hiring new purchasing chiefs include Philips, Diageo, Chrysler and KPN.

After having already faced four years of economic restraint, purchasing heads at companies operating in the US and Europe will have to be even more creative in finding ways to cut costs. However, there is concern in some quarters that procurement’s time in the spotlight is being reduced to little more than saving money.
At an event in London last week, procurement director and speaker Joe Pitman said ongoing financial difficulties were prompting CEOs to demand reduced spending and little else more sophisticated from purchasing. He said the consequence could be procurement slipping back into a tactical role. “I fear a lot of good and best practice will be lost or stall as professionals respond to that urgent call,” he said.
I understand his concern, but I would expect that ongoing demands to make savings in fact forces buying teams to do things in a more progressive way.
At the same event, Labour peer Lord Andrew Adonis said economic circumstances were compelling people to think differently. In some cases a fundamental redesign of services was required and this should involve procurement, he said.
One company that looks to be doing things differently is Procter & Gamble. The consumer goods giant has produced a template to assess the sustainability of itself and its suppliers and is making this freely available to all – including competitors.
Consolidation, collaboration and the sharing of ideas is a definite part of this next iteration of buying. At a local government level, some councils are now starting to work together to get better value for money to, for example, build schools or reduce wasted office space, realising that doing more of the same won’t achieve the savings they need to make.
Are you having to revert to traditional methods of making savings or are you getting a chance to stretch your legs and think strategically? Let me know.